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8-K - 8-K - ROYAL GOLD INCa15-10225_18k.htm
EX-99.2 - EX-99.2 - ROYAL GOLD INCa15-10225_1ex99d2.htm
EX-10.1 - EX-10.1 - ROYAL GOLD INCa15-10225_1ex10d1.htm
EX-99.4 - EX-99.4 - ROYAL GOLD INCa15-10225_1ex99d4.htm
EX-99.5 - EX-99.5 - ROYAL GOLD INCa15-10225_1ex99d5.htm
EX-99.3 - EX-99.3 - ROYAL GOLD INCa15-10225_1ex99d3.htm

Exhibit 99.1

 

 

Royal Gold Reports Record Volume in its Third Fiscal Quarter 2015 Results

 

DENVER, COLORADO. APRIL 30, 2015:  ROYAL GOLD, INC. (NASDAQ:RGLD; TSX:RGL) (together with its subsidiaries, “Royal Gold” or the “Company”) reports results for its third fiscal quarter ended March 31, 2015 (“third quarter”), including revenue of $74.1 million, up 28% from the same period a year ago, and Adjusted EBITDA(1) of $57.7 million, up 16% from the prior year quarter. Streaming revenue was $29.7 million, while royalty revenue was $44.4 million.

 

The Company reports net income attributable to Royal Gold stockholders (“net income”) of $25.0 million, or $0.38 per basic share for the third quarter, compared with net income of $20.1 million, or $0.31 per share from the same period a year ago.  The increase in our earnings per share was attributable to higher stream revenue from Mount Milligan and a lower effective tax rate.

 

Third Quarter Highlights Compared with the Year-Ago Quarter:

 

·                  Record volume of 60,823 Gold Equivalent Ounces (“GEO’s”), up 36%;

·                  Adjusted EBITDA of $57.7 million, up 16%;

·                  Operating cash flow of $65.9 million, up 47%;

·                  Net income of $0.38 per share, up 23%; and

·                  Higher revenue at Mount Milligan, Cortez, Mulatos, and Robinson, amongst others.

 

The average gold price was $1,218 per ounce for the third quarter, down 6% from $1,293 per ounce in the year ago quarter.

 

Tony Jensen, President and CEO, commented, “Our record volume and robust cash flow reflect the quality of our portfolio.  We observed production gains from many properties in our third quarter, which more than offset the lower gold price.  Looking forward to the remainder of calendar 2015, we anticipate strengthening production at Peñasquito, the continued ramp-up at Mount Milligan, and the startup of production at Phoenix as sources of future volume growth.”

 


(1)  The Company defines Adjusted EBITDA, a non-GAAP financial measure, as net income plus depreciation, depletion and amortization, non-cash charges, income tax expense, interest and other expense, and any impairment of mining assets, less non-controlling interests in operating income of consolidated subsidiaries, interest and other income, and any royalty portfolio restructuring gains or losses (see Schedule A).

 

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Adjusted EBITDA for the third quarter was $57.7 million ($0.89 per basic share), representing 78% of revenue, compared with Adjusted EBITDA of $49.7 million ($0.76 per basic share), or 86% of revenue, for the year ago quarter.  Adjusted EBITDA, as a percentage of revenue, was lower in the third quarter due to the inclusion of ongoing stream payments to Mount Milligan of $435 per ounce of gold, which are recorded as a cost of sales and totaled $10.5 million during the third quarter.

 

As of March 31, 2015, the Company had a working capital surplus of $733.9 million.  Current assets were $759.6 million compared to current liabilities of $25.7 million, for a current ratio of 30 to 1.

 

The Company reported an effective tax rate of 4% for the third quarter.  The U.S. Dollar has appreciated significantly against the Canadian Dollar, resulting in the recognition of unrealized foreign currency gains upon re-measurement of certain of our deferred tax liabilities during the period. We recorded tax benefits of $8.1 million during the third quarter related to these unrealized gains.  On a per share basis, these deferred tax benefits resulted in additional earnings per share of $0.12 for the three months ended March 31, 2015.

 

RECENT DEVELOPMENTS

 

Amendment to Revolving Credit Facility

 

On April 29, 2015, Royal Gold entered into Amendment No. 1 to the Sixth Amended and Restated Revolving Credit Agreement whereby Royal Gold increased the maximum availability from $450 million to $650 million and eliminated the $150 million accordion feature.  There were no other changes to the Sixth Amended and Restated Revolving Credit Agreement, including debt covenants, maturity date, commitment fee and interest rates.

 

Mount Milligan Gold Stream

 

On April 16, 2015, Thompson Creek reported that the ramp-up at Mount Milligan continues, with production of approximately 46,100 ounces of payable gold in the quarter ended March 31, 2015.

 

During the third quarter, Royal Gold, through a wholly-owned subsidiary, purchased approximately 26,200 ounces of physical gold, which came from a combination of provisional and final settlements associated with shipments of concentrate from Mount Milligan. The Company sold approximately 24,200 ounces of gold during the third quarter at an average price of $1,226 per ounce, and had approximately 6,800 ounces of gold in inventory as of March 31, 2015.

 

For the quarter ended March 31, 2015, average daily mill throughput was 39,569 tonnes per day, improving to 50,000 to 54,000 tonnes per day during the last half of March.  Thompson Creek expects to achieve design throughput of approximately 60,000 tonnes per day by calendar year-end.

 

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Phoenix Gold Project Stream

 

On April 14, 2015, Rubicon Minerals (“Rubicon”) announced that mill commissioning at the Phoenix Gold Project (“Phoenix”) commenced ahead of schedule, and reiterated that Phoenix remains on track for production in mid-2015.  Rubicon also announced that it completed 85% of the original underground development planned prior to the start of production.

 

The Company’s final commitment payment of $12.8 million as part of its Phoenix stream acquisition was made in February 2015.

 

Peñasquito

 

On April 9, 2015, Goldcorp reported that it integrated its Concentrate Enrichment Process (“CEP”) and Pyrite Leach Process into a single Metallurgical Enhancement Project (“MEP”). The MEP entered the feasibility study phase, which Goldcorp expects to be completed in early 2016.  Goldcorp indicated that the study is expected to form the basis of a new life-of-mine plan for Peñasquito, and could extend the mine life by more than five years through increased recoveries, the conversion of off-spec lead concentrates to on-spec, the conversion of copper from penalties to payables, and lower mining costs through minimization of re-handling and simplified mining of complex ores.

 

Ilovitza Project Gold Stream

 

On January 12, 2015, Euromax Resources (“Euromax”) announced that it closed a private placement with the European Bank for Reconstruction and Development (“EBRD”).

 

During the third quarter, Royal Gold paid its first $7.5 million deposit on the Ilovitza stream, which was conditioned upon Euromax raising an additional $5 million in equity, which was satisfied by the EBRD investment, and the satisfaction of certain other conditions.  As of March 31, 2015, the Company had a remaining commitment, subject to certain conditions, of $167.5 million.  Euromax completed a prefeasibility study for the Ilovitza project which estimates a 23 year mine life and a production startup in calendar 2018.

 

PROPERTY HIGHLIGHTS

 

Highlights at certain of the Company’s principal producing and development properties during the third quarter, compared with the prior fiscal year quarter ended March 31, 2014 are listed below. Production for our producing properties reflects the actual production subject to our interests reported to us by the various operators or from the operator’s publicly available information.

 

Principal Producing Properties

 

Andacollo — Payable gold production in concentrates decreased 8% as a result of lower mill production over the last few months.  Harder ore and unplanned maintenance downtime in the concentrator impacted copper concentrate shipments early in calendar 2015, while a failure of the tailings thickener and scheduled maintenance impacted mill production in the March quarter,

 

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which may impact our June quarter. We are currently expecting a stronger second half of the year at Andacollo.

 

Cortez — Production at Cortez increased 59% over the prior year quarter as surface mining activity increased at the Pipeline Complex, where our royalty applies, while no significant mining activity occurred in these areas during the prior year quarter.  While Barrick expects production subject to our royalty interests to be lower in calendar 2015, stripping of the Crossroads Deposit is scheduled to begin in 2015 where reserves subject to our interest total 3 million ounces.

 

Holt — Production decreased 8% as both ore milled and the ore grade were lower.  Zone 4 contributed 70% of the ore and Zone 6 contributed the remainder.  Although lower than the December 2014 quarter, throughput of 1,200 tonnes per day was in line with the calendar 2014 production rate.  Mill recoveries were at their expected 95% level for the current quarter.

 

Mount Milligan Production increased 18% to 46,100 ounces of payable gold during the quarter. However, throughput and production were impacted by frozen and plugged feeders and unscheduled mechanical issues. Thompson Creek implemented action plans to address the issues.  Mill throughput averaged 39,569 tonnes per day during the quarter, compared to 33,278 tonnes per day for the prior year quarter.  Throughput improved during the last half of March 2015, achieving 50,000 to 54,000 tonnes per day.

 

Mulatos — Production attributable to our royalty interest increased 24%, aided by the timing of the final settlement of gold that was produced at the end of the fourth calendar quarter of 2014, but for which settlement with the refinery had not yet occurred.

 

Peñasquito Payable gold production subject to Royal Gold’s royalty interest, which lags Goldcorp’s reported production due to the timing of concentrate shipments, increased nearly 50% over the prior year quarter to approximately 174,000 ounces, while silver, lead and zinc production decreased by 16%, 13% and 8%, respectively, over the prior year quarter.  Goldcorp expects the gold production for calendar 2015 to be weighted to the second half of the calendar year as mining will move into the higher-grade portions of the Peñasco pit beginning next quarter.

 

Robinson — Gold and copper production significantly increased over the prior year quarter.  The increase in production is due to the planned mine sequence moving back to the higher-grade Ruth pit, compared to production from the Liberty pit in the prior year quarter.

 

Voisey’s Bay — Nickel production decreased 7%, as the Voisey’s Bay mill experienced unplanned maintenance in January to repair the SAG mill.  The operation then returned to full production.  Copper production increased 8%.

 

Vale reports that the ramp-up of its new Long Harbour Processing Plant is underway with the plant producing over 500 tonnes of finished nickel in 1Q15.  The plant is currently operating on a blend of nickel matte from its Indonesian operations and Voisey’s Bay concentrate and will process only Voisey’s Bay concentrate as of the end of 2015.  Anticipating this transition, the Company has engaged in discussions with Vale concerning calculation of the royalty once

 

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Voisey’s Bay nickel concentrates are processed at Long Harbour.  While the Company may continue to engage in these discussions, there is no assurance that the Company and Vale will reach agreement on the proper calculation under the terms of the royalty agreement.

 

Historically, Vale has supplied the Company with Voisey’s Bay nickel concentrate shipment data on a monthly basis, and copper concentrate shipment data on a quarterly basis.  This data has allowed us to estimate our Voisey’s Bay quarterly royalty revenue for financial reporting purposes.  We did not receive all of this data for the months relevant to the royalty payments due for the December 2014 and March 2015 quarters.  Consequently, our March 2015 quarterly revenue estimate is based on historic concentrate shipment data, as well as an adjustment to our estimated December 2014 quarterly revenue based upon the actual royalty payment received in February 2015.  For future reporting periods, the Company intends to recognize Voisey’s Bay royalty revenue on a cash basis, or in the period in which actual payment information is received from Vale.  Accordingly, the revenue recognized for the Voisey’s Bay royalty for the June 2015 quarter may only include adjustments from the estimated March 2015 quarterly revenue.

 

Third quarter production and revenue for the Company’s principal royalty and stream interests are shown in Tables 1 and 2, historical production data is shown in Table 3, and a comparison of operators’ 2015 production estimates to actual production is shown in Table 4.  For more detailed information about each of our principal royalty and stream properties, please refer to the Company’s most recent Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with the SEC and available on the SEC’s website located at www.sec.gov, or our website located at www.royalgold.com.

 

CORPORATE PROFILE

 

Royal Gold is a precious metals royalty and stream company engaged in the acquisition and management of precious metal royalties, streams, and similar production based interests.  The Company owns interests on 196 properties on six continents, including interests on 38 producing mines and 23 development stage projects.  Royal Gold is publicly traded on the NASDAQ Global Select Market under the symbol “RGLD,” and on the Toronto Stock Exchange under the symbol “RGL.” The Company’s website is located at www.royalgold.com.

 

For further information, please contact:

 

Karli Anderson

Vice President Investor Relations

(303) 575-6517

 

Note: Management’s conference call reviewing the third quarter results will be held Thursday, April 30, at 10:00 a.m. Mountain Time (noon Eastern Time) and will be available by calling (855) 209-8260 (North America) or (412) 542-4106  (international), conference title “Royal Gold.”  The call will be simultaneously broadcast on the Company’s website at www.royalgold.com under the “Presentations” section.  A replay of this webcast will be available on the Company’s website approximately two hours after the call ends.

 

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Cautionary “Safe Harbor” Statement Under the Private Securities Litigation Reform Act of 1995:  With the exception of historical matters, the matters discussed in this press release are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from projections or estimates contained herein.  Such forward-looking statements include statements about the Company’s ability to invest in additional quality properties, operators’ expectations of construction, ramp up, production, and mine life, resolution of regulatory and legal proceedings (including with Vale regarding Voisey’s Bay), and other developments at various mines.  Factors that could cause actual results to differ materially from the projections include, among others, precious metals, copper and nickel prices; performance of and production at the Company’s royalty and stream properties; the ability of the various operators to bring projects into production as expected; delays in the operators securing or their inability to secure necessary governmental permits; decisions and activities of the operators of the Company’s royalty and stream properties; unanticipated grade, geological, metallurgical, processing, liquidity or other problems the operators of the mining properties may encounter; completion of feasibility studies; changes in operators’ project parameters as plans continue to be refined; changes in estimates of reserves and mineralization by the operators of the Company’s royalty and stream properties; contests to the Company’s royalty and stream interests and title and other defects to the Company’s royalty and stream properties; errors or disputes in calculating royalty and stream payments, or payments not made in accordance with royalty and stream agreements; economic and market conditions; risks associated with conducting business in foreign countries; changes in laws governing the Company and its royalty and stream properties or the operators of such properties; and other subsequent events; as well as other factors described in the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and other filings with the Securities and Exchange Commission.  Most of these factors are beyond the Company’s ability to predict or control.  The Company disclaims any obligation to update any forward-looking statement made herein.  Readers are cautioned not to put undue reliance on forward-looking statements.

 

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TABLE 1

Third Quarter Fiscal 2015

Revenue and Reported Production for Principal Royalty and Stream Interests

Three Months Ended March 31, 2015 and March 31, 2014

(In thousands, except reported production in oz. and lbs.)

 

 

 

 

 

Three Months Ended

 

Three Months Ended

 

 

 

 

 

March 31, 2015

 

March 31, 2014

 

 

 

 

 

 

 

Reported

 

 

 

Reported

 

Royalty/Stream

 

2015

 

Revenue

 

Production(1)

 

Revenue

 

Production(1)

 

Stream:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mount Milligan

 

Gold

 

$

29,718

 

24,200

 

oz.

 

$

5,953

 

4,500

 

oz.

 

Royalty:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Andacollo

 

Gold

 

$

8,507

 

9,500

 

oz.

 

$

10,197

 

10,400

 

oz.

 

Peñasquito

 

 

 

$

7,253

 

 

 

 

 

$

7,262

 

 

 

 

 

 

 

Gold

 

 

 

177,200

 

oz.

 

 

 

118,700

 

oz.

 

 

 

Silver

 

 

 

6.0

 

Moz.

 

 

 

7.1

 

Moz.

 

 

 

Lead

 

 

 

39.5

 

Mlbs.

 

 

 

45.3

 

Mlbs.

 

 

 

Zinc

 

 

 

82.6

 

Mlbs.

 

 

 

90.1

 

Mlbs.

 

Cortez

 

Gold

 

$

5,025

 

65,200

 

oz.

 

$

3,021

 

41,100

 

oz.

 

Holt

 

Gold

 

$

3,208

 

16,700

 

oz.

 

$

3,848

 

17,600

 

oz.

 

Mulatos

 

Gold

 

$

2,538

 

42,500

 

oz.

 

$

2,162

 

34,400

 

oz.

 

Voisey’s Bay

 

 

 

$

1,919

 

 

 

 

 

$

6,311

 

 

 

 

 

 

 

Nickel

 

 

 

17.2

 

Mlbs.

 

 

 

39.9

 

Mlbs.

 

 

 

Copper

 

 

 

N/A

 

 

 

 

 

9.7

 

Mlbs.

 

Robinson

 

 

 

$

1,866

 

 

 

 

 

$

1,010

 

 

 

 

 

 

 

Gold

 

 

 

10,800

 

oz.

 

 

 

3,900

 

oz.

 

 

 

Copper

 

 

 

29.1

 

Mlbs.

 

 

 

10.7

 

Mlbs.

 

Other

 

Various

 

$

14,076

 

N/A

 

 

 

$

17,984

 

N/A

 

 

 

Total Revenue

 

 

 

$

74,110

 

 

 

 

 

$

57,748

 

 

 

 

 

 

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TABLE 2

Third Quarter Fiscal 2015

Revenue and Reported Production for Principal Royalty and Stream Interests

Nine Months Ended March 31, 2015 and March 31, 2014

(In thousands, except reported production in oz. and lbs.)

 

 

 

 

 

Nine Months Ended

 

Nine Months Ended

 

 

 

 

 

March 31, 2015

 

March 31, 2014

 

 

 

 

 

 

 

Reported

 

 

 

Reported

 

Royalty/Stream

 

Metal(s)

 

Revenue

 

Production(1)

 

Revenue

 

Production(1)

 

Stream:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mount Milligan

 

Gold

 

$

66,693

 

53,900

 

oz.

 

$

8,591

 

6,600

 

oz.

 

Royalty:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Andacollo

 

Gold

 

$

28,599

 

31,000

 

oz.

 

$

39,089

 

40,400

 

oz.

 

Peñasquito

 

 

 

$

19,936

 

 

 

 

 

$

20,824

 

 

 

 

 

 

 

Gold

 

 

 

445,300

 

oz.

 

 

 

366,000

 

oz.

 

 

 

Silver

 

 

 

17.6

 

Moz.

 

 

 

19.8

 

Moz.

 

 

 

Lead

 

 

 

110.2

 

Mlbs.

 

 

 

132.2

 

Mlbs.

 

 

 

Zinc

 

 

 

252.0

 

Mlbs.

 

 

 

233.8

 

Mlbs.

 

Cortez

 

Gold

 

$

14,761

 

185,100

 

oz.

 

$

4,540

 

55,100

 

oz.

 

Voisey’s Bay

 

 

 

$

13,645

 

 

 

 

 

$

19,244

 

 

 

 

 

 

 

Nickel

 

 

 

53.8

 

Mlbs.

 

 

 

96.8

 

Mlbs.

 

 

 

Copper

 

 

 

44.0

 

Mlbs.

 

 

 

70.8

 

Mlbs.

 

Holt

 

Gold

 

$

9,043

 

45,800

 

oz.

 

$

10,452

 

47,500

 

oz.

 

Mulatos

 

Gold

 

$

6,301

 

105,300

 

oz.

 

$

7,340

 

116,200

 

oz.

 

Robinson

 

 

 

$

5,600

 

 

 

 

 

$

4,896

 

 

 

 

 

 

 

Gold

 

 

 

22,500

 

oz.

 

 

 

21,800

 

oz.

 

 

 

Copper

 

 

 

74.5

 

Mlbs.

 

 

 

50.5

 

Mlbs.

 

Other

 

Various

 

$

39,861

 

N/A

 

 

 

$

52,044

 

N/A

 

 

 

Total Revenue

 

 

 

$

204,439

 

 

 

 

 

$

167,020

 

 

 

 

 

 

8



 

TABLE 3

Historical Production

 

 

 

 

 

 

 

 

 

Reported Production For The Quarter Ended(1)

 

Property

 

2015

 

Operator

 

Metal(s)

 

Mar. 31, 2015

 

Dec. 31, 2014

 

Sep. 30, 2014

 

Jun. 30, 2014

 

Mar. 31, 2014

 

Andacollo(2)

 

75%

 

Teck

 

Gold

 

9,500

 

oz.

 

10,500

 

oz.

 

11,000

 

oz.

 

10,000

 

oz.

 

10,400

 

oz.

 

Cortez(3)

 

GSR1 and GSR2, GSR3, NVR1

 

Barrick

 

Gold

 

65,200

 

oz.

 

60,400

 

oz.

 

59,500

 

oz.

 

40,300

 

oz.

 

41,100

 

oz.

 

Holt

 

0.00013 x quarterly average gold price

 

St Andrew Goldfields

 

Gold

 

16,700

 

oz.

 

14,300

 

oz.

 

14,800

 

oz.

 

15,600

 

oz.

 

17,600

 

oz.

 

Mount Milligan(4)

 

Gold stream - 52.25% of payable gold

 

Thompson Creek

 

Gold

 

24,200

 

oz.

 

14,300

 

oz.

 

15,300

 

oz.

 

14,400

 

oz.

 

4,500

 

oz.

 

Mulatos(5)

 

1.0% - 5.0% NSR

 

Alamos

 

Gold

 

42,500

 

oz.

 

34,500

 

oz.

 

28,400

 

oz.

 

33,600

 

oz.

 

34,400

 

oz.

 

Peñasquito

 

2.0% NSR

 

Goldcorp

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gold

 

177,200

 

oz.

 

125,000

 

oz.

 

143,100

 

oz.

 

168,100

 

oz.

 

118,700

 

oz.

 

 

 

 

 

 

 

Silver

 

6.0

 

Moz.

 

5.1

 

Moz.

 

6.5

 

Moz.

 

7.8

 

Moz.

 

7.1

 

Moz.

 

 

 

 

 

 

 

Lead

 

39.5

 

Mlbs.

 

29.5

 

Mlbs.

 

41.3

 

Mlbs.

 

43.2

 

Mlbs.

 

45.3

 

Mlbs.

 

 

 

 

 

 

 

Zinc

 

82.6

 

Mlbs.

 

84.0

 

Mlbs.

 

85.4

 

Mlbs.

 

77.0

 

Mlbs.

 

90.1

 

Mlbs.

 

Robinson

 

3.0% NSR

 

KGHM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gold

 

10,800

 

oz.

 

5,100

 

oz.

 

6,600

 

oz.

 

5,800

 

oz.

 

3,900

 

oz.

 

 

 

 

 

 

 

Copper

 

29.1

 

Mlbs.

 

19.3

 

Mlbs.

 

26.1

 

Mlbs.

 

19.1

 

Mlbs.

 

10.7

 

Mlbs.

 

Voisey’s Bay

 

2.7% NSR

 

Vale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nickel

 

17.2

 

Mlbs.

 

19.6

 

Mlbs.

 

17.1

 

Mlbs.

 

26.9

 

Mlbs.

 

39.9

 

Mlbs.

 

 

 

 

 

 

 

Copper

 

NA

 

 

 

30.1

 

Mlbs.

 

22.0

 

Mlbs.

 

9.7

 

Mlbs.

 

9.7

 

Mlbs.

 

 

9


 


 

FOOTNOTES

Tables 1, 2 and 3

 


(1)

Reported production relates to the amount of metal sales that are subject to our royalty and stream interests for the stated period, as reported to us by operators of the mines.

 

 

(2)

The royalty rate is 75% until 910,000 payable ounces of gold have been produced — 50% thereafter. There have been approximately 248,000 cumulative payable ounces produced as of March 31, 2015. Gold is produced as a by-product of copper.

 

 

(3)

Royalty percentages: GSR1 and GSR2 — 0.40 to 5.0% (sliding-scale): GSR3 — 0.71%; NVR1 — 1.0140% excluding Crossroads and 0.6186% for Crossroads.

 

 

(4)

For our streaming interest at Mount Milligan, our revenue is a product of the reported production, our 52.25% stream interest, an applicable provisional percentage (for the first 12 shipments only) and an average gold sale price for the period.

 

 

(5)

The Company’s royalty is subject to a 2.0 million ounce cap on gold production. There have been approximately 1.37 million ounces of cumulative production as of March 31, 2015. NSR sliding-scale schedule (price of gold per ounce — royalty rate): $0.00 to $299.99 — 1.0%; $300 to $324.99 — 1.50%; $325 to $349.99 — 2.0%; $350 to $374.99 — 3.0%; $375 to $399.99 — 4.0%; $400 or higher — 5.0%.

 

10



 

TABLE 4

Calendar 2015 Operators’ Production Estimate

 

 

 

 

 

Calendar 2015 Operator’s Production

 

 

 

Calendar 2015 Operator’s Production Estimate(1),(2)

 

Actual(3)

 

Royalty/Stream

 

Gold

 

Silver

 

Base Metals

 

Gold

 

Silver

 

Base Metals

 

 

 

(oz.)

 

(oz.)

 

(lbs.)

 

(oz.)

 

(oz.)

 

(lbs.)

 

Andacollo(4)

 

52,200

 

 

 

10,300

 

 

 

Cortez GSR1

 

104,100

 

 

 

48,200

 

 

 

Cortez GSR2

 

27,900

 

 

 

17,000

 

 

 

Cortez GSR3

 

132,000

 

 

 

65,200

 

 

 

Cortez NVR1

 

97,200

 

 

 

48,300

 

 

 

Holt

 

64,000

 

 

 

16,200

 

 

 

Mount Milligan(5)

 

220,000-240,000

 

 

 

46,100

 

 

 

Mulatos(6)

 

150,000-170,000

 

 

 

N/A

 

 

 

Peñasquito(7),(8)

 

700,000-750,000

 

24-26 million

 

 

155,600

 

 

 

Lead

 

 

 

 

 

175-185 million

 

 

 

 

 

N/A

 

Zinc

 

 

 

 

 

400-415 million

 

 

 

 

 

N/A

 

 


(1)             There can be no assurance that production estimates received from our operators will be achieved.  Please refer to our cautionary language regarding forward-looking statements preceding Table 1 above, as well as the Risk Factors identified in Part I, Item 1A, of our Fiscal 2014 10-K for information regarding factors that could affect actual results.

 

(2)             The operators of our Voisey’s Bay and Robinson royalty interests did not release public production guidance for calendar 2015.

 

(3)             Actual production figures for Andacollo and Cortez are based on information provided to us by the operators, and actual production figures for Holt, Mount Milligan, Mulatos and Peñasquito (gold) are the operators’ publicly reported figures.

 

(4)             The estimated production figure shown for Andacollo is contained gold in concentrate.

 

(5)             The estimated and actual production figures shown for Mount Milligan are payable gold in concentrate.

 

(6)             Actual production was not available from the operator as of the date of this press release.

 

(7)             The estimated gold and silver production figures reflect payable gold and silver in concentrate and doré, while the estimated lead and zinc production figures reflect payable metal in concentrate.

 

(8)             The actual gold production figure for gold reflects payable gold in concentrate and doré as reported by the operator.  The actual production for silver, lead and zinc were not publicly available.  The Company’s royalty interest at Peñasquito includes gold, silver, lead and zinc.

 

11



 

ROYAL GOLD, INC.

Consolidated Balance Sheets

(Unaudited, in thousands except share data)

 

 

 

March 31,

 

June 30,

 

 

 

2015

 

2014

 

ASSETS

 

 

 

 

 

Cash and equivalents

 

$

715,228

 

$

659,536

 

Royalty receivables

 

39,486

 

46,654

 

Income tax receivable

 

 

21,947

 

Prepaid expenses and other

 

4,911

 

7,840

 

Total current assets

 

759,625

 

735,977

 

 

 

 

 

 

 

Royalty and stream interests, net

 

2,109,702

 

2,109,067

 

Available-for-sale securities

 

5,619

 

9,608

 

Other assets

 

35,081

 

36,892

 

Total assets

 

$

2,910,027

 

$

2,891,544

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

Accounts payable

 

2,205

 

3,897

 

Dividends payable

 

14,342

 

13,678

 

Foreign withholding taxes payable

 

198

 

2,199

 

Income tax payable

 

3,170

 

 

Other current liabilities

 

5,791

 

2,730

 

Total current liabilities

 

25,706

 

22,504

 

 

 

 

 

 

 

Debt

 

319,484

 

311,860

 

Deferred tax liabilities

 

135,666

 

169,865

 

Uncertain tax positions

 

15,461

 

13,725

 

Other long-term liabilities

 

694

 

1,033

 

Total liabilities

 

497,011

 

518,987

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

EQUITY

 

 

 

 

 

Preferred stock, $.01 par value, authorized 10,000,000 shares authorized; and 0 shares issued

 

 

 

Common stock, $.01 par value, 100,000,000 shares authorized; and 65,029,065 and 64,578,401 shares outstanding, respectively

 

650

 

646

 

Exchangeable shares, no par value, 1,806,649 shares issued, less 1,802,167 and 1,426,792 redeemed shares, respectively

 

197

 

16,718

 

Additional paid-in capital

 

2,168,675

 

2,147,650

 

Accumulated other comprehensive loss

 

(4,149

)

(160

)

Accumulated earnings

 

184,644

 

189,871

 

Total Royal Gold stockholders’ equity

 

2,350,017

 

2,354,725

 

Non-controlling interests

 

62,999

 

17,832

 

Total equity

 

2,413,016

 

2,372,557

 

Total liabilities and equity

 

$

2,910,027

 

$

2,891,544

 

 

12



 

ROYAL GOLD, INC.

Consolidated Statements of Operations and Comprehensive Income

 (Unaudited, in thousands except share data)

 

 

 

For The Three Months Ended

 

For The Nine Months Ended

 

 

 

March 31,

 

March 31,

 

March 31,

 

March 31,

 

 

 

2015

 

2014

 

2015

 

2014

 

Revenue

 

$

74,110

 

$

57,748

 

$

204,439

 

$

167,020

 

 

 

 

 

 

 

 

 

 

 

Costs and expenses

 

 

 

 

 

 

 

 

 

Cost of sales

 

10,542

 

1,940

 

23,452

 

2,875

 

General and administrative

 

5,545

 

3,866

 

21,197

 

15,093

 

Production taxes

 

935

 

1,723

 

4,356

 

5,110

 

Exploration Costs

 

155

 

 

155

 

 

Depreciation, depletion and amortization

 

24,783

 

21,605

 

67,273

 

66,676

 

Impairment of royalty and stream interests

 

 

 

28,339

 

 

Total costs and expenses

 

41,960

 

29,134

 

144,772

 

89,754

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

32,150

 

28,614

 

59,667

 

77,266

 

 

 

 

 

 

 

 

 

 

 

Interest and other income

 

435

 

1,837

 

714

 

1,986

 

Interest and other expense

 

(6,433

)

(5,990

)

(19,502

)

(17,580

)

Income before income taxes

 

26,152

 

24,461

 

40,879

 

61,672

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

(1,041

)

(3,980

)

(3,172

)

(15,133

)

Net income

 

25,111

 

20,481

 

37,707

 

46,539

 

Net income attributable to non-controlling interests

 

(97

)

(338

)

(559

)

(535

)

Net income attributable to Royal Gold common stockholders

 

$

25,014

 

$

20,143

 

$

37,148

 

$

46,004

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

25,111

 

$

20,481

 

$

37,707

 

$

46,539

 

Adjustments to comprehensive income, net of tax

 

 

 

 

 

 

 

 

 

Unrealized change in market value of available-for-sale securities

 

(2,168

)

(127

)

(3,988

)

(2,415

)

Comprehensive income

 

22,943

 

20,354

 

33,719

 

44,124

 

Comprehensive income attributable to non-controlling interests

 

(97

)

(338

)

(559

)

(535

)

Comprehensive income attributable to Royal Gold stockholders

 

$

22,846

 

$

20,016

 

$

33,160

 

$

43,589

 

 

 

 

 

 

 

 

 

 

 

Net income per share available to Royal Gold common stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

0.38

 

$

0.31

 

$

0.57

 

$

0.71

 

Basic weighted average shares outstanding

 

65,033,547

 

64,963,605

 

64,999,331

 

64,895,464

 

Diluted earnings per share

 

$

0.38

 

$

0.31

 

$

0.57

 

$

0.71

 

Diluted weighted average shares outstanding

 

65,129,362

 

65,082,780

 

65,122,313

 

65,012,901

 

Cash dividends declared per common share

 

$

0.22

 

$

0.21

 

$

0.65

 

$

0.62

 

 

13



 

ROYAL GOLD, INC.

Consolidated Statements of Cash Flows

(Unaudited, in thousands)

 

 

 

For The Three Months Ended

 

For The Nine Months Ended

 

 

 

March 31,

 

March 31,

 

March 31,

 

March 31,

 

 

 

2015

 

2014

 

2015

 

2014

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

Net income

 

$

25,111

 

$

20,481

 

$

37,707

 

$

46,539

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

 

Depreciation, depletion and amortization

 

24,783

 

21,605

 

67,273

 

66,676

 

Non-cash employee stock compensation expense

 

836

 

(470

)

3,660

 

1,289

 

Gain on distribution to non-controlling interest

 

 

(259

)

 

(259

)

Amortization of debt discount

 

2,611

 

2,418

 

7,624

 

7,138

 

Impairment of royalty and stream interests

 

 

 

28,339

 

 

Tax benefit of stock-based compensation exercises

 

 

(112

)

(74

)

(320

)

Deferred tax benefit

 

(17,096

)

(4,964

)

(34,199

)

(13,002

)

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

 

Royalty receivables

 

(2,172

)

845

 

7,168

 

8,175

 

Prepaid expenses and other assets

 

1,127

 

(672

)

4,471

 

12,329

 

Accounts payable

 

(560

)

1,005

 

(1,742

)

194

 

Foreign withholding taxes payable

 

(2

)

(1,425

)

(2,001

)

(11,533

)

Income taxes payable (receivable)

 

26,969

 

3,075

 

25,191

 

(4,551

)

Other liabilities

 

4,313

 

3,353

 

4,777

 

2,411

 

Net cash provided by operating activities

 

$

65,920

 

$

44,880

 

$

148,194

 

$

115,086

 

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

Acquisition of royalty and stream interests

 

(21,607

)

(31,603

)

(60,341

)

(79,692

)

Tulsequah stream termination

 

10,000

 

 

10,000

 

 

Other

 

446

 

281

 

(71

)

227

 

Net cash used in investing activities

 

$

(11,161

)

$

(31,322

)

$

(50,412

)

$

(79,465

)

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

Net proceeds from issuance of common stock

 

 

467

 

775

 

561

 

Common stock dividends

 

(14,343

)

(13,674

)

(41,712

)

(39,706

)

Purchase of additional royalty interest from non-controlling interest

 

 

(11,522

)

 

(11,522

)

Debt issuance costs

 

 

(1,284

)

 

(1,284

)

Distribution to non-controlling interests

 

(316

)

(834

)

(1,227

)

(1,913

)

Tax expense of stock-based compensation exercises

 

 

112

 

74

 

320

 

Net cash used in financing activities

 

$

(14,659

)

$

(26,735

)

$

(42,090

)

$

(53,544

)

Net increase (decrease) in cash and equivalents

 

40,100

 

(13,177

)

55,692

 

(17,923

)

Cash and equivalents at beginning of period

 

675,128

 

659,289

 

659,536

 

664,035

 

Cash and equivalents at end of period

 

$

715,228

 

$

646,112

 

$

715,228

 

$

646,112

 

 

14



 

SCHEDULE A

 

Non-GAAP Financial Measures

 

The Company computes and discloses Adjusted EBITDA.  Adjusted EBITDA is a non-GAAP financial measure. Adjusted EBITDA is defined by the Company as net income plus depreciation, depletion and amortization, non-cash charges, income tax expense, interest and other expense, and any impairment of mining assets, less non-controlling interests in operating income of consolidated subsidiaries, interest and other income, and any royalty portfolio restructuring gains or losses. Other companies may define and calculate this measure differently.  Management believes that Adjusted EBITDA is a useful measure of the performance of our royalty and stream portfolio. Adjusted EBITDA identifies the cash generated in a given period that will be available to fund the Company’s future operations, growth opportunities, shareholder dividends and to service the Company’s debt obligations. This information differs from measures of performance determined in accordance with U.S. generally accepted accounting principles (“GAAP”) and should not be considered in isolation or as a substitute for measures of performance determined in accordance with U.S. GAAP. Below is a reconciliation of net income to Adjusted EBITDA.

 

Royal Gold, Inc.

Adjusted EBITDA Reconciliation

 

 

 

For The Three Months Ended

 

For The Nine Months Ended

 

 

 

March 31,

 

March 31,

 

 

 

(Unaudited, in thousands)

 

(Unaudited, in thousands)

 

 

 

2015

 

2014

 

2015

 

2014

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

25,111

 

$

20,481

 

$

37,707

 

$

46,539

 

Depreciation, depletion and amortization

 

24,783

 

21,605

 

67,273

 

66,676

 

Non-cash employee stock compensation

 

836

 

(470

)

3,660

 

1,289

 

Allowance for uncollectible royalty receivables

 

 

 

2,997

 

 

Impairment of royalty and stream interests

 

 

 

28,339

 

 

Interest and other income

 

(435

)

(1,837

)

(714

)

(1,986

)

Interest and other expense

 

6,433

 

5,990

 

19,502

 

17,580

 

Income tax expense

 

1,041

 

3,980

 

3,172

 

15,133

 

Non-controlling interests in operating income of consolidated subsidiaries

 

(97

)

(80

)

(559

)

(277

)

Adjusted EBITDA

 

$

57,672

 

$

49,669

 

$

161,377

 

$

144,954

 

 

15